Congress picks the wrong target

The financial crisis of 2008 had many causes, but few people doubt the leading role of reckless and under-regulated U.S. financial institutions. America's banks and mortgage lenders, attracted by lucrative fees, made too many loans to too many people who were obviously unlikely to repay them. Many borrowers didn't understand what they were getting into, and neither did many investors, who bought the securities into which these dubious mortgages had been packaged.

The whole thing came crashing down, leaving us with the nastiest recession since the Great Depression. Taxpayers had no choice but to bail out the banks, whose executives soon resumed paying themselves outlandish sums and battling regulation that might prevent another crisis.

Who's the villain here? Elizabeth Warren, of course, the Harvard University bankruptcy expert and godmother of the new federal Consumer Financial Protection Bureau. At least, that's the impression we get from Congress, where Republicans have relentlessly beat up on this distinguished scholar, who had the temerity to suggest -- long before the meltdown -- that a financial version of the Food and Drug Administration was needed to protect consumers from predatory practices.

If only Washington had listened! The new bureau was finally created after the crisis as part of the wide-ranging Dodd-Frank reforms, which, while imperfect, at least have the potential to make another such crisis less likely. But Warren, the obvious choice to run the agency, has been demonized in Congress by the financial industry's minions there. And 44 Senate Republicans have vowed to oppose any nominee unless the bureau is restructured in ways transparently aimed at weakening the fledgling agency.

The fear, of course, is that the bureau will be effective. But the attacks on Warren are part of a much larger effort to defang additional federal regulation of banks, mortgage companies and securities practices. Forces in Congress, for example, are working hard to make sure the Securities and Exchange Commission and the Commodities Futures Trading Commission, both of which have expanded responsibilities under the Dodd-Frank Wall Street Reform and Consumer Protection Act, lack the funds they need to do a really good job.

Several bills have been proposed to water down or delay Dodd-Frank itself. One would foolishly weaken Washington's ability to regulate derivatives, the risky financial bets that played a big role in exacerbating and spreading the last crisis. Another would simply -- and needlessly -- postpone Dodd-Frank derivative reforms until 2013.

These efforts are not just wrongheaded. They are also evidence of the outsized influence enjoyed by financial industries in the halls of Congress, where despite a brush with global meltdown -- along with high unemployment, millions of foreclosures and widespread voter anger -- some lawmakers still want to undermine the government's best efforts to protect Americans and prevent a replay. Far better, evidently, to demonize a law professor who had the nerve to criticize the banks.